Caspian pipeline project eyes early 1996 start

Sponsors of a proposed pipeline to export Caspian region crude oil by way of the Black Sea have settled on a plan that could allow construction to begin in January 1996.

If the Caspian Pipeline Consortium Ltd. (CPC) by yearend can negotiate a turnkey construction contract, Phase I facilities could be ready to begin handling oil shipments from Russia, Kazakhstan, and Azerbaijan by January 1997.

CPC's board of directors has agreed to begin talks exclusively with a joint venture (JV) of Willbros Group Inc. of Panama, and Saipem SpA of Italy. The Willbros-Saipem JV's proposal was among those reviewed by CPC since May as part of an international bidding round that began Jan. 10.

Phase I of the Caspian pipeline's development is to include construction of 250 km of 40 in. line between Kropotkin, Russia, and a Black Sea port to be built north of the Russian port of Novorossiisk. An existing 50 km, 28 in. pipeline is to transport oil to Kropotkin from Tikhoretsk to the northwest (see map, OGJ, Jan. 30, p. 38).

Existing pipelines transport oil to Tikhoretsk from Samara, Russia, Lisichansk, Ukraine, and Baku.

Phase I facilities also would be able to receive crude shipments from the Volga-Urals region, western Siberia, western Kazakhstan, and other parts of Azerbaijan.

The governments of Russia, Kazakhstan, and Oman formed CPC in 1992 to build and operate pipelines in Russia and Kazakhstan.

Russia and Kazakhstan last March agreed to ship minimum volumes of crude through the CPC pipeline, ensuring the financial viability of Phase I facilities. Oman has agreed to provide all needed equity and to guarantee availability of Phase I financing.

Agreement Pending

CPC estimates the cost of Phase I pipeline facilities at $350-400 million. Initial capacity is to be 300,000 b/d.

Subject to a final agreement, a unit of Willbros is to lead the Willbros-Saipem JV. Partners are to share equally responsibilities for Phase I detailed engineering, procurement, and construction. Saipem affiliate Snamprogetti will perform detailed engineering as a subcontractor on the project.

Edward M. Smith, CPC general director and pipeline project executive, said officials decided to build a pipeline terminal and port north of Novorossiisk after studies showed it would reduce the project's environmental effect and lessen port congestion. Planners concluded the new port would have far more oil handling capacity than would be possible at Novorossiisk.

Facilities of the new export point are to include onshore storage and a single point mooring (SPM) system for tanker loading.

Preliminary plans for CPC Phase II facilities would boost system capacity to 1.24-1.5 million b/d.

Phase II construction would include a new crude pipeline to Kropotkin from Komsomolskaya, Russia. Oil from Kazakhstan's Tengiz field would flow around the Caspian Sea to Komsomolskaya through an existing pipeline.

Azeri producers also would be able to export more oil through Phase II facilities.